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Output Fluctuations and Firm Recruitment Effort

Author

Listed:
  • Bagger, Jesper

    (University of Edinburgh)

  • Fontaine, Francois

    (Paris School of Economics)

  • Galenianos, Manolis

    (University of London)

  • Trapeznikova, Ija

    (Royal Holloway, University of London)

Abstract

This paper examines the relationship between output fluctuations and firms’ recruitment efforts using Danish data that link online job ads with high-frequency firm-level revenue and value-added. While overall output growth is weakly correlated with advertisement rates, decomposing output into permanent and transitory components reveals a strong link between persistent shocks and recruitment effort. A one standard deviation permanent shock raises advertisement rates by 10-16% of a standard deviation, whereas transitory shocks show no significant effect. These results highlight the importance of shock persistence in labor demand and offer empirical support for dynamic search-and-matching models of the labor market.

Suggested Citation

  • Bagger, Jesper & Fontaine, Francois & Galenianos, Manolis & Trapeznikova, Ija, 2025. "Output Fluctuations and Firm Recruitment Effort," IZA Discussion Papers 18068, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18068
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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